|
Jim - a couple of comments - the rates on Bloomberg the day before the auction closes are a reasonably good predictor of the auction results. However, it is a real live (dutch) auction, so the rates aren't exactly what you see in the 2ndary market the day before.
As people point out the yields on TIPs are low right now. Its far from clear if and when they'll move back up though - its certainly possible that the market has experienced a fundamental shift in inflation expectations that could last for some time.
I participated in last weeks auction of 20yrs, and will continue to do so annually. I'm trying to build my own inflation-protected annuity of sorts. I am 39 1/2, so am exactly 20 years away from being able to withdraw from my IRA without penalty. My intention is to buy enough TIPs every year to give me ~60k a year in income (in 2008 dollars) starting when I'm 59 1/2. I figure some years I'll be buying in favorable TIPS markets, in other years less so. But for me this is part of a larger plan so I'm not worrying too much about timing.
Re auction vs. secondary - in my experience the 2ndary market for retail investors sucks, but I admit I haven't done too much research lately. You can participate in treasury auctions for free at treasurydirect, or for a nominal fee or even free at some brokers. Fido for example doesn't charge for treasury auctions (although they rape you if you want to buy a vanguard fund). My IRA is through etrade, where the auctions cost me $40.
Re funds vs. individual bonds, there's plenty written on that here and the TIPS angle probably doesn't change the arguments on either side. For me it makes sense to buy the bonds directly, given my larger plan. Basically, over the next 20 years I'll be building a portfolio of around 1M face in TIPS, and its only going to cost me $40 per year (assuming etrade's auction fee remains constant). Clearly thats far less than a fund will cost me.
__________________
Money's just something you need in case you don't die tomorrow.
| 
Quote:
Linear Mode
